Proto Labs (PRLB) Stock: Weak On High Volume Today

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

Trade-Ideas LLC identified Proto Labs ( PRLB) as a weak on high relative volume candidate. In addition to specific proprietary factors, Trade-Ideas identified Proto Labs as such a stock due to the following factors:

PRLB has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $13.9 million.

PRLB has traded 52,076 shares today.

PRLB is trading at 3.29 times the normal volume for the stock at this time of day.

PRLB is trading at a new low 3.03% below yesterday's close.

'Weak on High Relative Volume' stocks are worth watching because major volume moves tend to indicate underlying activity such as material stock news, analyst downgrades, insider selling, selling from 'superinvestors,' or that hedge funds and traders are piling out of a stock ahead of a catalyst. Regardless of the impetus behind the price and volume action, when a stock moves with strength and volume it can indicate the start of a new trend on which early investors can capitalize (or avoid losses by trimming weak positions). In the event of a well-timed trading opportunity, combining technical indicators with fundamental trends and a disciplined trading methodology should help you take the first steps towards investment success.

Proto Labs, Inc., together with its subsidiaries, manufactures computer numerical control (CNC) machined and injection molded custom parts for prototyping and short-run production. PRLB has a PE ratio of 50.4. Currently there are 5 analysts that rate Proto Labs a buy, no analysts rate it a sell, and 2 rate it a hold.

The average volume for Proto Labs has been 356,100 shares per day over the past 30 days. Proto has a market cap of $2.0 billion and is part of the industrial goods sector and industrial industry. The stock has a beta of -0.43 and a short float of 11% with 16.38 days to cover. Shares are up 8.7% year-to-date as of the close of trading on Thursday.

TheStreet Quant Ratings rates Proto Labs as a hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures and impressive record of earnings per share growth. However, as a counter to these strengths, we also find weaknesses including premium valuation and disappointing return on equity.

Highlights from the ratings report include:

The revenue growth greatly exceeded the industry average of 3.5%. Since the same quarter one year prior, revenues rose by 33.0%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.

PRLB's debt-to-equity ratio is very low at 0.00 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with this, the company maintains a quick ratio of 3.54, which clearly demonstrates the ability to cover short-term cash needs.

The gross profit margin for PROTO LABS INC is rather high; currently it is at 66.70%. Regardless of PRLB's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, PRLB's net profit margin of 20.72% significantly outperformed against the industry.

The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. Compared to other companies in the Machinery industry and the overall market on the basis of return on equity, PROTO LABS INC has underperformed in comparison with the industry average, but has exceeded that of the S&P 500.